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The average closing costs required to buy a home in the US in 2021 were $6,905 including transfer taxes, and $3,860 excluding transfer taxes, according to data from mortgage technology company ClosingCorp.
Transfer taxes are a tax that some state or local governments charge when ownership of a property is transferred from one person to another. The buyer or the seller may pay this cost, depending on where you live.
Closing costs are a major expense to consider when shopping for a mortgage, or considering buying a house. Your closing costs can add significantly to the amount you need to buy a home, and are an expense that's separate from your down payment.
It is possible to get a loan without closing costs, but often, the costs roll into the life of the loan. You may find that a loan with lower or no closing costs has a higher interest rate, which could make costs higher than simply paying up front. A lender could also add closing costs to the loan's principal, which increases the total amount you'll pay interest on.
ClosingCorp averaged data from 4.4 million single-family home purchase transactions in 2021 and calculated the average amount buyers paid in closing costs.
Where you live will have a significant impact on what you'll owe to close on your house. According to the data, buyers in Washington, DC paid about $29,888 in closing costs with transfer taxes, while the average Missouri buyer spent $2,061 with transfer taxes.
Here are the average closing costs by state, both with and without transfer taxes owed at closing.
State | Average closing costs with taxes | Average closing costs without taxes |
Alabama | $2,986 | $2,623 |
Alaska | $3,581 | $3,581 |
Arizona | $4,701 | $4,701 |
Arkansas | $3,115 | $2,281 |
California | $7,953 | $5,665 |
Colorado | $3,881 | $3,806 |
Connecticut | $8,821 | $4,108 |
Delaware | $17,859 | $3,888 |
Florida | $8,554 | $4,498 |
Georgia | $3,762 | $2,863 |
Hawaii | $7,463 | $5,879 |
Idaho | $4,082 | $4,082 |
Illinois | $5,929 | $4,733 |
Indiana | $2,200 | $2,200 |
Iowa | $3,146 | $2,741 |
Kansas | $2,793 | $2,793 |
Kentucky | $2,802 | $2,546 |
Louisiana | $3,711 | $3,386 |
Maine | $4,420 | $2,864 |
Maryland | $14,721 | $4,459 |
Massachusetts | $7,964 | $4,904 |
Michigan | $5,714 | $3,511 |
Minnesota | $4,011 | $2,592 |
Mississippi | $2,756 | $2,756 |
Missouri | $2,061 | $2,061 |
Montana | $3,337 | $3,337 |
Nebraska | $2,781 | $2,210 |
Nevada | $6,383 | $4,222 |
New Hampshire | $8,183 | $2,804 |
New Jersey | $7,915 | $4,158 |
New Mexico | $3,513 | $3,513 |
New York | $16,849 | $6,168 |
North Carolina | $3,406 | $2,642 |
North Dakota | $2,501 | $2,501 |
Ohio | $4,223 | $3,346 |
Oklahoma | $2,893 | $2,507 |
Oregon | $4,327 | $3,862 |
Pennsylvania | $10,634 | $4,221 |
Rhode Island | $5,568 | $3,419 |
South Carolina | $3,447 | $2,501 |
South Dakota | $3,105 | $2,843 |
Tennessee | $3,911 | $2,694 |
Texas | $4,548 | $4,548 |
Utah | $4,837 | $4,837 |
Vermont | $7,906 | $3,500 |
Virginia | $6,346 | $3,461 |
Washington | $13,927 | $4,862 |
Washington, DC | $29,888 | $6,502 |
West Virginia | $3,406 | $2,465 |
Wisconsin | $3,459 | $2,692 |
Wyoming | $2,589 | $2,589 |
Closing costs vary slightly between states. Transfer taxes are a big factor, especially in states with high transfer taxes. The amount you'll pay at closing will largely depend on your state's real estate transfer tax rate.
Closing costs are paid to some of the entities that help you complete the homebuying process and close on your home. Here are some of the typical costs you can expect to pay, according to the Federal Reserve.
Lenders charge this fee to cover the costs of processing a loan application and checking your credit.
This fee covers the lender's costs of underwriting and preparing your mortgage.
You'll have to pay interest for the time between when your first payment starts and you close on the mortgage.
Lenders have a title company run a search on the home's title in order to verify that the seller is the property owner and that the title doesn't have any liens on it. Lenders typically require borrowers to purchase a lender's title insurance policy as well, which protects the lender in the event that title issues come up later on. If you want this protection for yourself, you'll also need to purchase an owner's title insurance policy.
An appraisal helps to assure the bank that the home is worth at least the amount of the loan.
These fees are paid to the lawyer who manages the closing for the lender.
Surveys make sure that all buildings are where they're supposed to be, and to record any locations of changes or improvements. This may not be required if a recent survey is available.
Property taxes for the home you're buying may also be due at closing. The amount you'll owe will be prorated to cover the taxes you're responsible for that the seller has already paid for the year.